Manhattan residential real estate sales plunged by 38% in the first quarter of this year while the average sales price dropped 5% as high interest rates put a dent in transactions across the borough.
In the first quarter of 2023, there were 2,242 apartments and townhouses sold in Manhattan — down from 2,546 during the same period last year, according to real estate broker Douglas Elliman and appraisal firm Miller Samuel.
The total volume of sales dropped to $4.4 billion in the quarter, according to the report, which was cited by CNBC.
In the fourth quarter of 2022, there was a 29% decline in sales.
Jonathan Miller, the CEO of Miller Samuel, told CNBC that he expects activity to pick up in the second quarter.
“I think we’ll see a seasonal uptick in the spring,” said Miller. “But some of it depends on whether the [Federal Reserve] holds rates where they are.”
The recent announcement by the oil-producing cartel OPEC+ that they would cut the output of crude could drive up gas prices in the US — fueling even higher rates of inflation and making it more likely that the Fed will once again hike interest rates.
High-interest rates mean would-be buyers are deterred from making purchases due to low affordability while would-be sellers prefer to stay in their current properties and pay mortgage rates that are relatively low.
Nationwide, sales of rental apartment buildings fell 74% in the first quarter compared to the same period last year — the steepest drop since the 2008 financial crisis, according to a report by data firm CoStar Group.
The report was cited on Tuesday by The Wall Street Journal.
Buyers in Manhattan are also limited by low inventory.
In the first three months of the year, there were 6,996 properties listed for sale — which is lower than the five-year average of 7,200, according to Miller Samuel.
There was an increase in luxury real estate transactions. High-end sales — which are characterized by those whose prices are in the top 10% of the market — were up 11% in the quarter year over year.
According to the report, some three-quarters of sales over $5 million were all cash.
Overall, there was a record 57% increase in cash deals.